Tag Archives: fines

Obamacare’s critics continue to argue that the Affordable Care Act (ACA) will self-destruct. Now, some claim that the mandate that uninsured Americans must purchase coverage– or pay a stiff fine— is so riddled with new “loopholes and exemptions,” that it no longer exists.

14 New Waivers

When the ACA passed Congress in 2010, it offered a handful of basic exemptions to the mandate that everyone must be insured. For example, if the only comprehensive coverage available would cost more than 8% of a household’s income, the fine would be waived. Individuals who were in jail, or belonged to a recognized religious group that objects to all insurance, including Medicare and Social Security, also would be excused.

“Hardship Exemptions”

Perhaps the most important waiver bails out low-income Americans who have the bad luck to live in a state that has refused to expand Medicaid. Originally, the ACA stipulated that states must extend Medicaid to adults earning less that 138 percent of the federal poverty level ($27,310 for a family of three), with the Federal government paying the lion’s share of the extra cost. At the same time, the ACA set out to help low and middle-income families earning more than 138% of the FPL, by providing government subsidies designed to help them purchase insurance in their state exchanges.

Already, the fear-mongers are sounding the alarm: If you don’t purchase exactly the type of health insurance that the Affordable Care Act (ACA) requires, come tax-time the IRS will slap you with a stiff penalty.

As I explain in the post below, the ACA mandates that if you’re not already covered, you must buy insurance that includes “essential benefits” such as hospitalization, maternity and newborn care, and mental health services. Ignore the mandate this year, and you will be fined when you file your taxes next year.

How Much Would You Owe?

If you opt out of purchasing insurance that covers you and your family in 2015, the penalty will equal Either:

a flat dollar amount, of $95 per uncovered adult and $47.50 per child, up to a maximum of $285, whichever Is greater.

“Whichever is greater” means that wealthier taxpayers will be required to pay 1% of their income, and as a result can easily wind up owing significantly more than $285. This doesn’t mean that millionaires would be fined tens of thousands of dollars. An affluent family’s penalty also is capped, at the average cost of bronze plans sold in state Exchanges nationwide.

If This Sounds Complicated, Turbo-Tax Makes it Simple

If, at this point, your eyes are glazing over, the good news is that you can calculate your penalty, quickly and easily, on Turbotax’s online calculator. Just type in your income, zip code, and the size of your household, and in about three minutes, TurboTax will tell you the size of your fine—and, most importantly, whether you might qualify for an exemption to the penalty.

Little Known “Hardship Exemptions”

for people who have experienced personal hardships such as domestic violence, substantial property damage from a fire or flood, from a fire or flood, the death of a close relative, a utility cut-off, or bankruptcy.